It would hardly be possible to run a modern society, whether 'capitalist' or 'soclialist' without the use of 'paper and bytes'I agree entirely. The question is though: What do those papers and bytes represent? At present they represent the promises of politicians.
Bill also writes:
The gold standard whilst based on a finite resource was based on a commodity with little intrinsic valueI'm not suggesting that money be based on something having intrinsic value.
Because nothing has intrinsic value:
The first step in understanding the Austrian concept is to realize that value is entirely subjective, rather than something objective. Value, therefore, is something that each individual person weighs on a purely private, not a public, set of scales. To try to find something akin to a yardstick for distance or a balance for weight, by which to measure value so that two or more persons can see and agree on a "just price," is futile. There is no such thing according to the Austrian concept of value. To try to find value that way is like trying to find the trail for an animal, and hence find the animal, when there is no such animal.hence:
According to the Austrian premise, then, value is not intrinsic in the sense of being susceptible of objective measurement by any means whatever. Certain qualities of things are, to be sure, intrinsic and measurable, and affect value for this or that person. But they affect value in different ways for different persons and are at best only a part of the origins of value.The reason that gold and silver became used as money was not because they have intrinsic value - they don't - but because millions of people over thousands of years and in all sorts of societies made individual decisions to value those minerals. Value is subjective.
Friedman argued in favour of a gradually increasing supply of (government) money - to keep pace with economic growth. But it's not turned out like that. The UK and US are "enjoying" monetary growth of around 13% PA. Hence the asset booms in housing and shares. We are now suffering the consequences.
More realistically, Hayek wrote in favour of a currency backed by a "basket" of commodities.
But I still don't trust any politicians having power over our money. I'm with Murray Rothbard:
The book made huge theoretical advances. He was the first to prove that the government, and only the government, can destroy money on a mass scale, and he showed exactly how they go about this dirty deed.James Higham is correct. The current system was set up by financial cabals using the power of the state for their own ends. I can see why some folk think that socialism is all about "the government helping the poor". In reality government spending is a case of someone living at the expense of someone else. The first "someone" is often richer than the second. And so I say to Martin that "immediately after the United Kingdom suffering a bank run" is exactly the occasion to examine the cause. And the cause isn't capitalism (free markets and property rights) but its opposite.
Rothbard shows precisely how banks create money out of thin air and how the central bank, backed by government power, allows them to get away with it. He shows how exchange rates and interest rates would work in a true free market. When it comes to describing the end of the gold standard, he is not content to describe the big trends. He names names and ferrets out all the interest groups involved.